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KUALA LUMPUR (Sept 6): There is further downside risk to Malaysian equities as the country's gross domestic product (GDP) is expected to slow in the second half of this year (2H17), according to Affin Hwang Capital Research.

In a stratergy note today, the research house said the second quarter (2Q17) corporate earnings season was disappointing, with the number of misses increasing to 44% of its coverage, it said, adding that this was largely driven by disappointment from small and mid-capitalisation companies.

Further downside risks include a decline in commodity prices, further disappointment in corporate earnings, failing to meet national fiscal consolidation plans, and capital outflow from accelerated monetary policy tightening in US and Europe, Affin Hwang said.

However, it projected that there are sufficient drivers to ensure that its lowered corporate earnings growth estimates of 2.7% and 6.8% for 2017 and 2018 respectively could be met.